Adult ADD and Money

The 1 Month Budget

As someone who does not have ADHD, I love to plan. There have been times in my life, where I have prepared and tried to stick to budgets that have been for a year or longer. Honestly I think my budget plan was pretty sound, and logically there should have been no reason why I could not stick to it.

What I did not take into account was the physical, emotional, and mental barriers that we encounter every day. My budget did not take into account that things broke, and had to be repaired or replaced. I did not take into account times when I just wanted to do something, or get something. I did not deal well when I was unable to stick to my budget, and therefore gave myself permission to continue to make bad financial decisions because I had already blown my plan for the year.

I still continue to do longer term financial planning when it comes to certain financial goals. My current budget however is for just a month. I know there are a lot of people reading this, that just shiver when I mention the term budget, however having a one month budget is simple enough to prepare, and is an important tool to help you prioritize your spending. If you prepare your budget on a spread sheet, it is something that should only take a couple of minutes each month to update. The most important aspect of the one month budget for me is that it forces me to focus on the present. It is harder for me to push off paying down a loan, or putting less money in my savings, because I can't put if off on my budget. It is important for allof us to keep the majority of our financial focus on the present, it is where all of the action takes place that will help shape our financial future.

Overlooking the Obvious

Everyday on my way to and from work I pass by a new Market and Deli that I think about going into. They have done an excellent job at advertising, with billboards and an electronic sign that gets your attention. When I look at the lunch and takeout menu they have diverse items that I think that I would enjoy, there is just one big glaring problem. The deli is on a really narrow dirt road where you can not even see the building from the main road. I am sure that many other people like me, have thought about trying the new deli and end up changing their mind when faced with this one annoying obstacle.

Sometimes when making money management decisions ADD adults get so caught up in dealing with  small, more stimulating decisions that they overlook the most obvious reasons why they are struggling financially. I am not saying that projects like improving your credit score, reducing your grocery bill, reducing your total energy use, or perfecting your investment portfolio are not worthwhile endeavors. But the fact is that if you want true financial change in your life you have to deal with the tough main issues that are holding you back. For some people it is finding meaningful work that they enjoy, for others it is dealing with the emotional issues that cause overspending, or it can be developing and executing the systems to help pay and manage bills.

I believe that if the Market & Deli wants to have long term success, it is going to have to do something about improving how people can access it. This is not a simple or easy decision, it could mean moving the deli to a place where it can been seen, or it may mean widening and improving the road so that it is more inviting. The more challenging and difficult a task is the more likely you will receive a greater benefit from dealing with it. Often people want easy ways to deal with their problems and most of the time they get frustrated when the truth is that most challenges you deal with in life are not easy. 

My love/hate (mostly hate) relationship with Money

Diane Ladd challenged her readers to write about their love affair with money. (For more information see previous post) I have got to admit that this is a difficult assignment for me. I think this is because even though I work in the Financial industry and my blog is titled Adult ADD and Money, I really have come to loathe money is general. I don't really loathe the concept of money, I loathe the damage that having money or lacking money can cause to a person.

Growing up I viewed money as the great divider. The social groups that you were in mostly depended on your perceived social status. Money bought you the clothes so that you would fit in in school, it determined your social calendar, and bought you the toys you could brag about. Sometimes the scorn of kids who had more money than me was so thick you could cut it with a knife. You could feel their attitude of superiority, and it hurt.

I deserve a lot of the blame for my relationship with money. When I have had a little extra I would always find someway to spend it all that gave me a temporary high. I tried to ignore money when I was lacking it, but that never solved my problems, money is a cruel lover and was always seeking revenge when I was neglectful. I don't always appreciate what money has done for me and I feel I am not always putting enough into the relationship to keep it stable in the future.

However my relationship with money is continuing to improve. Once I discovered that money was not responsible for my happiness, that I was the only person or thing who was in charge of my happiness. I have been less judgmental of the relationship that I and others have with money, I have been more accepting of money's faults, and I continue to notice more of money's strengths. There just might be hope for us yet.

Interesting ADD Friendly Blog Posts - 4/9

Here are three blog posts that I have read this week that are ADD friendly and deal with money issues that are common for adults with ADD.

A quick and easy way to control spending (Brip Blap)

60% of NBA Players Go Broke Within 5 Years of Retirement? (All Financial Matters)

Tax Cat: Help! I Owe The IRS Money And I Don't Have Any! (The Consumerist)

There are two stages between Education and Action

In Jennifer Koretsky's book Odd One Out (The Maverick's Guide to Adult ADD) she lists the four stages in order to make true lasting change in your life. The four stages are:

1.  Education

2.  Awareness

3.  Reframing

4.  Action 

The problem that many ADD adults have when trying to make financial changes is that they take action without properly going through the other stages of change. Many people who want to make financial changes start by trying to educate themselves. There are two main pitfalls that happen during the education stage. People get overwhelmed with the vast amount of financial information and stop making progress toward their goals, and people map out an unrealistic action plan based only on the education that they did.

Being overwhelmed can derail any goal, the key is to make your goal specific enough so that you can limit the scope of your education. For example it is a lot easier to educate yourself about getting out off debt, than it is to educate yourself on improving your finances.

The other pitfall of going from education directly to action can be even more detrimental than taking no action at all. When developing a financial action plan it is important to understand your strengths and weaknesses in regards to your financial behavior (Awareness). For example if you did not have any issues with impulsive spending, but did have issues with actually paying your bills you would want your action plan to focus on changing you bill paying behavior.  Instead of focusing on not paying your bills you could focus on how to increase the likelihood of paying your bills on time (Reframing). This could involve getting someone else to support you, paying bills when you are at your mental peak, or automating some of the bill paying steps. By focusing on all of the stages of change you will be more likely to make progress with your financial goals.

Is a Medical Flexible Spending Plan right for you?

Many employers have recently added medical flexible spending plans as a benefit. A medical FSA allows an employee to deposit earnings directly into a FSA account without having to pay taxes on that money. The employee fills out a claim form or uses a special debit card in order to access the FSA account for qualified medical related expenses. If you have a lot of medical expenses each year, you can save quite a bit of money. For example if you have deposited and used your FSA account for $2,400 worth of qualified medical expenses you would save $800 assuming a tax rate of 33%.

Based on these type of savings it would seem logical to put some money aside to fund your FSA account each year. However there are a couple of drawbacks to FSA accounts that are not ADD friendly. In many cases you will need to fill out a claim form in order to be reimbursed for expenses. The others major drawback is that if you do not spend the money that you put into the account each year, your employer gets to keep the remaining money in the account. It is possible to lose money on a medical FSA account if you overestimate your medical expenses and forget to file claims.

If you have regular medical expenses, it is probably a good idea to put some money aside in an FSA account. However if you do not have regular medical expenses and you are likely to forget to file claims, funding an FSA account may not be a good decision for you.

   

How much of your money do you actualy control?

How much of your money do you actually control? This is an important question to ask yourself so that you will have the proper perspective when making spending and savings decisions. I have set up an example of a typical household to illustrate my point. What I have done is to take a typical American household budget and put in what I believe is the minimum amount they will need to spend in order to function.

• Household Income                  $ 50,000
• Taxes                                    $16,000      32%
• Housing (including Maint.)       $14,000      28%
• Clothing                                 $500          1%
• Transportation                        $2,500        5%
• Utilities                                  $1,000        2%   
• Food                                     $4,000        8% 
• Misc                                     $500           1% 
• INCOME CONTROLLED        $11,500       23%

In this example you control 23 cents for every dollar you earn. Keep in my that this example does not include cable, cell phones, and other items that someone else might think is a necessity. Finding a way to save 1,000 over a year might not seem like a big deal if you compare it to the $50,000 that was earned, however it becomes quite significant when you compare it to the $11,500 that you actually control. The great thing about money is that you can exactly measure your financial situation, but without the proper perspective any measurements you do can be counter productive. 

Overcoming Money Challenges

There are several reasons why it can be difficult for an ADD adult to manage money:

1.  There are infinite choices involved with spending and managing money. The decisions can become overwhelming and an person with ADD will be more likely to avoid making decisions altogether.

2. The concept of money is not easily visualized ( people with ADD respond better when they are able to visualize a concept)

3. Day to Day management of money can be boring and tedious ( people with ADD have a greater difficulty completing task that are boring and tedious)

Here are a couple of tips to deal with some of the difficulties with money management

Reduce!  - Limiting you choices and decisions can do wonders for your ability to manage money. Examples of this include:

• Shopping at smaller stores where there are less choices.
• Writing down a shopping list of the things you need to buy before you go shopping. This will limit your decisions at the store and will reduce impulsive buys.
• Reduce the number of credit cards you use. This will reduce the number of bills that you pay

Use visualization techniques to help you in you battle with money management (yes it is a battle)

• Use a calendar to help you track when bills need to be pay.
• If you are saving for a specific goal, use pictures to remind you what you are saving for. It can be a lot easier to save for a house if you can visualize what you hope to buy when you have finished saving.
• Use different colors for different types of expenses if you are preparing a budget or Net Worth statement.

Unfortunately there is not a lot that can be done about money management being boring. There are things you can do to make money management easier:

• Make an appointment with yourself to pay bills. This should be done at a time where you are close to your mental peak. Try to maintain a regular schedule where you are paying bills around the same time with a regular interval. It is easier to put off paying bills when you do not have an established routine.
• The environment where you pay bills is also very important. It should be an area where you have all of the supplies to pay bills with minimal distractions. The key is to try to avoid having reasons why you can not pay your bills or manage your money.

September Deficit

Looking back on my spending habits, there were two months where I would cringe the most when opening my bills. Opening the bills in January was always tough because of holiday spending, an increased heating bill and the additional self pressure of trying to adhere to financial resolutions. However I think what caused the most stress is when I opened bills for September. There are several reasons why people are stressed by September Bills.

1. People underestimate the amount that they will spend for school tuition and/or fees. For the most part schools have already figured out what their tuiton and fees are going to be, make sure you know how much tuition and fees are going to go up so that you can adjust you budget, or sign up for an installment plan that many schools offer.

2. People underestimate the amount that they are spending on fall clothing and/or school supplies. This is an area where it is important to establish and stick to a budget before you start shopping. The stores are designed to maximize the amount of money you will spend. It will also help you if you make a list of what you want to buy before you go shopping. This will help you make sure you get what you need while trying to stick to your budget. It will not serve you, if you stick to your budget, but your kids have seven pairs of jeans and no shoes.

3. People spent more money than they had planned on during the summer.  There are many tempting ways to spend money during the Summer. For me it was all of the little expenses that seemed to add up.Here are three major expenses to keep an eye on:

Electricity Costs - Here are some ways to reduce summer electricity expenses

Entertainment - In the summer time there are many concerts, movies, and outdoor activities that cost money. It is easy to lose track of your entertainment spending. If there is something that you want to do badly this summer, don't deny yourself, just keep in mind that you probably can't afford to do everything that you want to do, and that there are many low and no cost alternatives for entertaining yourself and your family this summer.

Gasoline Costs - These are costs than can easily creep up on you because you only have to think about it when you fill up. Including travel costs can help you keep your summer adventures within budget.

Food Costs - No one wants to cook during the Summer. However there are ways to get around this. Many people cook on their grill almost every night. You could also prepare several meals at one and freeze them of have dishes that you can serve cold.

Goal Setting

Setting goals for what you want to do with you life is the first step in financial planning. Setting goals gives you the framework for how much you want or need to earn and what you want to spend. However, setting goals can be a challenge for many Adults with ADD. Common problems that ADD adults have with goal setting include:

• Having too many goals.
• Underestimating the time needed to complete the goal.
• Lack of research to ensure whether the goal is reasonable or attainable.
• Not breaking down long term goals into smaller achievable goals.

Setting life goals can give you the motivation and direction needed in order to better manage your finances. While goal setting is not easy for the ADD adult, there are several things that can be done in order to improve the probability of reaching your goals:

• Make sure you goals are measurable and have a specific time frame. Ambiguity and Procrastination are major enemies of goal achievement.
• Share you major goals with others. This can be difficult for many ADD adults because of past failures, and from the negative feedback from past failures, you don't have to share your goals with everybody but if you share them with a few nurturing people it can do wonders to your odds of achieving your goal.
• Use visualization techniques. ADD adults retain information better when it is presented in a visual fashion. Examples of how to use visualization in regard to goal setting include using visual aids of the goal you want to achieve ( if you want to graduate from college, you can make up a picture of you in your graduation cap and gown), tracking your progress by using color charts, and using diagrams instead of lists to set your goals.
• Make sure to review and revise your goals every once in a while. Your goals need to reflect the changes in your life and the changes that you want to make to your life.

Setting goals for what you want to do with you life is the first step in financial planning. Setting goals gives you the framework for how much you want or need to earn and what you want to spend. However, setting goals can be a challenge for many Adults with ADD. Common problems that ADD adults have with goal setting include:

• Having too many goals.
• Underestimating the time needed to complete the goal.
• Lack of research to ensure whether the goal is reasonable or attainable.
• Not breaking down long term goals into smaller achievable goals.

Setting life goals can give you the motivation and direction needed in order to better manage your finances. While goal setting is not easy for the ADD adult, there are several things that can be done in order to improve the probability of reaching your goals:

• Make sure you goals are measurable and have a specific time frame. Ambiguity and Procrastination are major enemies of goal achievement.
• Share you major goals with others. This can be difficult for many ADD adults because of past failures, and from the negative feedback from past failures, you don't have to share your goals with everybody but if you share them with a few nurturing people it can do wonders to your odds of achieving your goal.
• Use visualization techniques. ADD adults retain information better when it is presented in a visual fashion. Examples of how to use visualization in regard to goal setting include using visual aids of the goal you want to achieve ( if you want to graduate from college, you can make up a picture of you in your graduation cap and gown), tracking your progress by using color charts, and using diagrams instead of lists to set your goals.
• Make sure to review and revise your goals every once in a while. Your goals need to reflect the changes in your life and the changes that you want to make to your life.